Money goals are the financially sharper cousins of our life goals
By: Sayantani Kar
Different strokes for different folks. Some are happy letting life lead them, some others devise careful plans to go ahead, while the rest fall somewhere between these two styles.
Goals, then, might not ring a bell with all of us. But when we begin to invest, we should not be flying blind. Goals light the way for us.
But even if we had our life goals down pat, would they be enough for smart investing? Life goals help us seek out our financial goals. For choosing our investments, we need sharper money goals.
Tavaga is everything you need to start saving for your goals, stay on track, and achieve them in time.
Life goals tend to sound more diffused than what money goals need to be. We may imagine we own a home someday and that would sit fine as a personal life goal. But when investing for it, we cannot leave it at that. We would have to think in terms of price appreciation and inflation.
Investments can help us buy that first home if we zero in on possible neighbourhoods to buy in and the size of the house we want to acquire. We can’t be targeting a bungalow to begin with, if we are realistic. But thinking in terms of a 1.5-2 bhk in a residential hood with good connectivity would furnish us with a likely ticket price. Widely available property price graphs will point to the appreciation we can anticipate by the time we are ready to buy.
Money goals, including a long term goal of say, retirement income, dictate our asset diversification, a vital step in investing (not putting all our eggs in one basket).
If we can wait for a span of five to seven years, we can choose equities (such as equity exchange traded funds or ETFs) early on and then move to debt (bond ETFs) towards the end of our waiting time. It would give our investment room to multiply.
Money goals can even be for a short span of time and for something as specific as watching the next cricket World Cup.
For investments to work for us and prevent us from taking on debt to meet our life goals, defined money goals are the key.